Retirement Planning Retirement PlanningRetirement Planning
Advice on how to prepare for life after government.

A Little Extra Under FERS

ARCHIVES

Almost half of all employees who retire under the Federal Employees Retirement System are entitled to receive the FERS Supplement. The supplement is a temporary boost to the basic retirement benefit designed to take the place of the Social Security tier of FERS when an employee retires at an age younger than 62. Those who retire under the Voluntary Early Retirement Authority option also are entitled to the FERS supplement when they reach the FERS minimum retirement age of 55 to 57, depending on their year of birth.

In 2011, a total of 37,839 employees retired under FERS. Of those, 18,490 were not eligible to receive the supplement, since they were retiring at 62 or later -- or on a disability retirement or an immediate or postponed “MRA+10” retirement (a reduced benefit for employees who are old enough to retire, but don’t have the minimum service required for an unreduced benefit). The supplement is payable when you retire at the MRA with 30 years or more of service, or at age 60 with at least 20 years of service. It also is payable to employees who retire under special provisions, such as law enforcement officers and firefighters.

How Much Is It?

The easiest way to estimate the monthly supplement is by using the following formula: Number of civilian years under FERS (military service and other Social Security-covered employment is not included) divided by 40, multiplied by your Social Security benefit at 62.

So, for example, suppose Sue works 30 years under FERS and is entitled to $1,600 per month in Social Security benefits at 62. She would be eligible for a supplement of about $1,200 (30/40 x $1,600) per month.

If you're getting close to your retirement date, you may want to request a retirement computation from your agency's human resources office that includes an estimated supplement.

Then What?

There’s no need to apply specifically for the FERS supplement. If you’re entitled to it, it will be included with your FERS basic retirement benefit. It is not paid during the interim retirement period while your retirement application is being processed by the Office of Personnel Management, but once your claim is finalized, you will receive the full amount.

The supplement ends when you turn 62, regardless of when you intend to apply for Social Security retirement benefits. Like Social Security, the supplement is subject to an earnings test. If a retiree's earnings exceed an annual earnings limit, the supplement will be reduced by $1 for every $2 earned above that amount. The earnings limit for 2013 is $15,120.

OPM asks each retiree who has reached the minimum retirement age for a statement of earnings each year he or she is eligible to receive the supplement. Earnings, for purposes of calculating the supplement reduction, consist of the sum of wages for services performed in the year, plus all net earnings from self-employment, minus any net loss from self-employment. For members of special groups such as law enforcement retirees and firefighters, the earnings test will not be used until they reach the minimum retirement age.

An Example

Lloyd retired under an early retirement authority on Aug. 31, 2008, on his 55th birthday, with a combined 30 years of civilian and military federal service. He was not entitled to the supplement at first, but when he turned 56 (his minimum retirement age) he became eligible. Lloyd’s 56th birthday was Aug. 31, 2009. His first supplement was paid on Oct. 1, 2009, (covering the month of September). He received $552 based on his civilian service under FERS. But Lloyd had begun working at a new job in March 2009 and had earnings that would exceed the earnings limit and eliminate his supplement. Still, he received the supplement for the months of September, October, November and December of 2009 even though he had returned to full-time employment in March.

Lloyd continued to receive the supplement in 2010, until he got his first RI-92-99 Earnings Report on Sept. 18. Since Lloyd had reported income for 2009 that was enough to completely eliminate the supplement, his supplement was reduced to zero retroactive to August 2010. (He was entitled to the supplement for the first year since the annual earnings reduction cannot exceed the total annuity supplement to which the individual was entitled in the first year.) In November 2010, Lloyd was informed that he would no longer be entitled to receive the supplement due to the earnings report for 2009. Lloyd had been overpaid the supplement from August to October, for a total of $1,656. OPM collected the overpayment by reducing his FERS benefit over the next 10 months.

Lloyd is no longer receiving the supplement, because he continues to work full time. But he now plans to fully retire at the end of January 2013. He is only 58 years old and is entitled to have the supplement restored now that his earnings will be below the 2013 limit of $15,120. He has contacted OPM to let them know that his earnings will end on Jan. 31. He will be entitled to resume the supplement in August 2013 (the month of his 60th birthday) and the benefit will end at age 62.

Resources

Here are some resources to help you further understand the FERS Supplement and the earnings limit:

 

Tammy Flanagan has spent 30 years helping federal employees take charge of their retirement by understanding their benefits. She runs her own consulting business at www.tammyflanagan.com and provides individual counseling as well as online training for the National Active and Retired Federal Employees Association, Plan Your Federal Retirement as well as the Federal Long Term Care insurance Program. She also serves as the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars.

For more retirement planning help, tune in to "For Your Benefit," presented by the National Institute of Transition Planning Inc. live on Federal News Radio on Mondays at 10 a.m. ET on WFED AM 1500 in the Washington-metro area. Archived shows are available on NITPInc.com.

FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Forecasting Cloud's Future

    Conversations with Federal, State, and Local Technology Leaders on Cloud-Driven Digital Transformation

    Download
  • The Big Data Campaign Trail

    With everyone so focused on security following recent breaches at federal, state and local government and education institutions, there has been little emphasis on the need for better operations. This report breaks down some of the biggest operational challenges in IT management and provides insight into how agencies and leaders can successfully solve some of the biggest lingering government IT issues.

    Download
  • Communicating Innovation in Federal Government

    Federal Government spending on ‘obsolete technology’ continues to increase. Supporting the twin pillars of improved digital service delivery for citizens on the one hand, and the increasingly optimized and flexible working practices for federal employees on the other, are neither easy nor inexpensive tasks. This whitepaper explores how federal agencies can leverage the value of existing agency technology assets while offering IT leaders the ability to implement the kind of employee productivity, citizen service improvements and security demanded by federal oversight.

    Download
  • IT Transformation Trends: Flash Storage as a Strategic IT Asset

    MIT Technology Review: Flash Storage As a Strategic IT Asset For the first time in decades, IT leaders now consider all-flash storage as a strategic IT asset. IT has become a new operating model that enables self-service with high performance, density and resiliency. It also offers the self-service agility of the public cloud combined with the security, performance, and cost-effectiveness of a private cloud. Download this MIT Technology Review paper to learn more about how all-flash storage is transforming the data center.

    Download
  • Ongoing Efforts in Veterans Health Care Modernization

    This report discusses the current state of veterans health care

    Download

When you download a report, your information may be shared with the underwriters of that document.